Although median household incomes rose some 2.7 per cent after factoring inflation from 2011 to 2012, income inequality in Singapore – as measured by the Gini coefficient – has widened in the same period even as government reliefs and taxes are taken into account.

Singapore's Department of Statistics said in a report Wednesday that median monthly household incomes from work increased from $7,040 in 2011 to $7,570 the following year.

This signified a 7.5 per cent jump in such incomes. The increase was reduced to 2.7 per cent after taking into account Singapore’s inflation.

However, the Gini coefficient, a measure of income inequality, rose by 0.005. This jump was from 0.473 in 2011 to 0.478 the year after.

After factoring in government reliefs and taxes, the adjusted Gini coefficient had a steeper rise of 0.011 in the same period. This jump was from 0.448 in 2011 to 0.459 the year after.

The Gini coefficient is a measure of inequality among how frequent a set of values appear. The measure is applied to various disciplines such as economics and health. An income-based Gini coefficient is zero in a country if incomes are totally equal and one if incomes are unequal.

The biggest wealth gap in Asia belongs to Hong Kong. The city’s Gini coefficient was 0.537 two years ago. Norway’s Gini coefficient is the lowest in the world, at 0.256 two years ago.

Median monthly household incomes from work also faced lesser gains year-on-year. Such incomes rose 5.6 per cent in 2011 but only rose 2.7 per cent in 2012.

The same goes for such incomes per household member, from a rise of 2.7 per cent in 2011 to a rise of 1.9 per cent in 2012.

However, income growth in the bottom 60 per cent of households rose more than the top 40 per cent from 2007 to 2012.

Most of the increases doubled from those in the previous five-year period.

Resident households in HDB 1- & 2-room flats received the most reliefs at an annual average of $6,140 per household member. On average, resident households received $1,340 of transfers per member from various government schemes in 2012.

Dr Tan Khay Boon, senior lecturer at SIM Global Education, believes increases in income inequality can be mitigated with government reliefs and taxes.

“The important issue is to assist those who are caught at the lower income group to move up their income level so that the income gap will not widen to the extent that it may cause social instability,” he said.